MonthMarch 2009

Yes, it’s a scene from Season 5 of The Wire. It’ll make sense if you read to the end.

Paywalls. We ought to talk. Please note that I’m not talking from any knowledge of any plans that commercial people in the Guardian have; I am far too lowly to know what they’re thinking about. I’m just saying that with the collapse of papers all over the place, largely caused by a collapse in print advertising that isn’t seeing a concomitant rise in online advertising spend, newspapers are going to have to think of all sorts of ways to generate revenue. Perhaps it’s selling links. Perhaps it’s buying readership. Whatever: but put everything back on the table, baby, because all those optimistic predictions from the first and second dotcom booms now look frayed and careworn.

Which makes it interesting to see Tim Burden slagging them off. Go visit his site, it’s interesting. But first, he has a post from February (see how remiss I am) which offers ten reasons why you shouldn’t have paywalls.

Let’s take them on then. (I’ve put this into an ordered list so you can see the numbers – on his post he’s done it just in paragraphs, which I think makes it hard to follow the rebuttals in the comments.)

So here we go. Here’s his assertions, his (usually shortened) arguments; click back for the full ones; and my response.

Paywalls annoy peopleThe hapless reader has found a link in Google or a blog or some other site. Worse, in his RSS feed. He clicks, waits, and finds he must sign up or pay money. He clicks back, angry for having wasted the time. If he clicked from your blog, he’s angry at you.That’s tough. Perhaps it depends on how the blog presents it: a must-read piece? How hard is it to sign up? Does the paywall take Paypal? Does Paypal take penny payments? It’s not a foregone conclusion. And the FT, for example, lets you read a certain number of stories per month, then puts up the paywall.Consider this too: if you get enough of those situations where you click the link, and find a paywall, eventually you’ll think to yourself that damn it, you’re going to pony up.

Paywalls discourage linksBecause paywalls annoy people, I for one won’t link to a site that has them. People shouldn’t: it’s disrespectful of readers.You might think it’s disrespectful now, but you’d find it a lot more disrespectful if the site you used to link to shut down, wouldn’t you? You used to think its content was worth someone’s time, but not their money. What if it turns out that wasn’t a fair exchange?

Paywalls are anti-webThe web is built of documents, and links between documents. No links, no web. It’s a tautology. So if paywalls discourage links, they must be anti-web.Does that make the iTunes Store and the iPhone App Store and eMusic and Napster and Netflix and all those other sites that charge for content they hold anti-web, too? Or are you “pro-web” (as opposed to anti, right?) if you have a shopfront that anyone can browse but only charge them to get the content? I thought that’s what a paywall was.

Paywalls must failAnybody can make content and get it to me for free. And they will. Put up a paywall and watch them storm the ramparts.Yes, anyone can make content. If you’d like to read my children’s analysis of the world news they heard on the radio, you’re welcome. In fact, if you want to write one, go right ahead. You may find it eats into the time you have to actually work, or rest, but hey, it’s free, and everything wants to happen for free, doesn’t it? Except, for some peculiar reason, the mortgage/rent and the food in the parlour. And that computer on the desk.On the other hand, if you want to read the work of people who have had to overcome evasion and stonewalling to find original content that could have some relevance to you (eg government or corporate misspending or malfeasance), or just things that you’d like to know about but haven’t the time to find, then you might consider that if those people – let’s call them “journalists” – can’t get paid via advertisers, they might look to you to help with those mortgage/rent/food/computer payments.

Paywalls cause warIf you are actually successful at having content no one else has, and charging for it, someone will find a way to get it free. And then your programmers will get overtime to fix it.Yup, someone will find a way to get it for free. Probably by copy/pasting it. Then their credit card will get zonked, or similar. But that isn’t the key problem. It is already possible to get most major films on DVD for much less than is charged in shops; yet people buy the real thing. If you trust that most people will behave honestly, given the chance, the problems of people taking content for free becomes more of an edge case.

Paywalls are a scamBecause readers can get the content free elsewhere, and you can deliver it for free, you are trying to charge for something that has a value of…FREE. Rip-off!This is a repeat of No.4 above. And it’s also a syllogism. The content doesn’t have a value of “free”. As gets mentioned below, papers have survived for a long time by delivering readers to advertisers (a thread that is being frayed). Thus the content has a value: the value implicit in being a method of getting readers and advertisers together. In the past, that’s been quite high. Problem now is that advertisers think they have better ways to find “readers”. Which may be true. The question then becomes (which doesn’t get dealt with in this debate) what the implicit value of the content is. But on its face, if it’s stuff that people will seek out, it’s higher than zero.How can I state this so confidently? Because I know what the web used to be like. I can promise you that I didn’t spend much of the day trawling the web when the best thing on it was Yahoo’s Site of the Day.

Paywalls limit readershipAnyone in the content business knows that their product is not newspapers, or broadcasts, or magazines, or even news, or even content, or even information. No! It is readership. Your product is readership, which you sell to advertisers.True. But maybe the model is going to have to change. In which case we also sell readers to each other: the thing that becomes valuable is the other readers who are prepared to cross the paywall and discover each other’s shared knowledge and interests arising out of the content they find there. I suspect the FT’s Most Read stories give a useful indication of something.

Paywalls hurt ad revenueFollows from above, paywalls reduce readership. Someone will be quick to say, “Oh, but it will be a qualified readership, more valuable.” Bullshit. You can get the same qualification by having users sign up to comment/upload/post on forums etc. There are two types of readers: one hit wonders from Google and locals. Your job is to get locals to participate, not try to squeeze every last dime out of them.
Participation is nice. Money is a lot more useful. And if the “locals” think they’re getting something of value, might they not be persuaded to pay for it? Which then means that objection (1) at the top, about random readers clicking through, becomes less of a problem.

Paywalls are old-thinkIn the olden days, newspapers had monopolies. Those monopolies can now die with a WordPress install. In days of yore, you could force people to pay your price. Now, the only price is…FREE. Haven’t we gone over this a couple of times already? I’ve considered spending a couple of days really researching what really happened to lead to Saffron Walden’s town square getting dug up. It would require interviewing market traders, shopkeepers, council officials, people representing the company that put up the money that was used for the development, and the company that is doing the construction work. Three days total work, probably. Then I could write it up. It might stop it happening again; it might expose flawed thinking among those involved. That would be useful. But it doesn’t happen for free.The idea that truly useful content generates itself is the grand misconception of those armed with a web browser and a WordPress installation. It’s not true. Oh, sure, you can tell us what your cat ate and link to a story about Obama or Gordon Brown and give us the benefit of your knowledge. That ain’t useful, though. It’s not even free; it costs your time that you could be spending learning something useful, like how to program the iPhone and write a kick-ass app.

Paywalls don’t workOh right…we don’t have to argue from principles. We can justgatherempiricalevidence.Good links, all of them. But circumstances change. And the WSJ hasn’t abandoned its paywall. The New York Times is wondering quite how to monetise its content again (because things are getting tight there). So we all thought that free was the only workable model? Sure, and we used to think that a phone without a keyboard would be a flop. Times change.

Does any of my arguments make paywalls inevitable? No. Do any of this make paywalls utterly rebuttable? I don’t think so. We’re going to see a time of huge experimentation pretty soon, and paywalls are definitely going to be in that mix.

Big banks, it seems, have only gained political strength since the crisis began. And this is not surprising. With the financial system so fragile, the damage that a major bank failure could cause—Lehman was small relative to Citigroup or Bank of America—is much greater than it would be during ordinary times. The banks have been exploiting this fear as they wring favorable deals out of Washington. Bank of America obtained its second bailout package (in January) after warning the government that it might not be able to go through with the acquisition of Merrill Lynch, a prospect that Treasury did not want to consider.

The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say: nationalize troubled banks and break them up as necessary.

Scary article by a former head of the IMF – in 2007/8. Basically, unless the US (and UK?) can end their capture by the financial markets, they’re not going to be able to get out of the cycle of incomplete bailouts of the banks. How to fix it? Tough medicine: nationalise and/or break up the banks into “not too small to fail” units.

Q: So what’s your prescription for business journalists? What do they need to know and do? Not everybody’s going to have a $20,000 a year Bloomberg terminal to play with.

Mark Pittman: Hardly anyone has a Bloomberg machine and the ones that do don’t know how to use it.

But you know what? The government needs to make this kind of data much more publicly available than it is now. We purchase a lot of this. But, for instance, a lot of the bond deals were (not subject to disclosure). And all the CDO’s were private placements. We know why—because they placed them with themselves. The number of secret deals going bad is astounding, it’s probably 90 percent of them were secret deals.

Intriguing: Mark Pittman of Bloomberg on how hardly anyone understood what was going on – but he did. Who was listening, though?

Let me tell you about Saffron Walden, the town closest to where I live. The town council decided that the market square – the place where for decades, even centuries, market traders have plied their wares a couple of times a week – needed a makeover.

This puzzled me. There was nothing wrong with the market square. Cars could park there (on non-market days). People could walk through it on their way to the banks, the library, the shops (though one big department store at the top of the square shut down when its landlord moved to increase its rent; sayonara, the shop replied. Sure hope that landlord can make money from fresh air). As squares go, this one rocked.

But no: what it really needed, some part of the council decided, was to have the fountain in the middle prettied up with some lights, and dig up the road a bit. Don’t ask me why. I didn’t see anything about it in the local papers – freesheets – until it was a fait accompli.

“This scheme will help to breathe new life into a great town centre in Essex enhancing its appearance and making it more user-friendly.

“We know from feedback from our residents how important local market towns to our communities, particularly at these times of economic uncertainty, and we want to do everything we can to help our local businesses attract more shoppers.

“We have worked hard to minimise any inconvenience caused by these works and no shops will need to close because of these works, but I would apologise for any disruption in advance”.

And if you want to know where those quotes came from – were they dug up by an effortful reporter trying to get to the bottom of what’s going on? Perhaps. Or perhaps they came from the same place as this council announcement, since it contains exactly the same words in exactly the same order.

Oh, you call it “disruption”? As a corollary of prettying up the fountain, the market traders had to move out of the market so the works could proceed. They’d have to move right out of the area where the shops and footfall is, to the common about 200 yards away. No shelter, exposed to the elements, and not in a place where people in the normal course of their other shopping would go.

This is of course exactly what you wish for as a market trader: to be removed from the place where hundreds of people will walk past, to somewhere with lousy weather and no people so that a fountain can get a cosmetic do-up.

Early reports suggested they’ve seen a 50% falloff in trade.

And for the shops that line the road into the market square, things aren’t much better. Digging up the square involves closing the roads feeding it. Fewer people can park their cars; fewer people shop. For a market town dependent on people buying discretionary items, that’s not good. Hell, even the places selling food, such as the deli, have seen business fall. People aren’t coming through.

OK, so now I want to know: how the hell did the council think this was a good idea? It’s killing its own revenue source – these traders. More to the point, where were the newspapers that could have made some sort of noise about this? Where are the people like – let’s be honest – me, who love nothing better than causing a bit of trouble by asking difficult questions of powerful people (a trait I first noticed in myself back in school which has never gone away)? Why did such an obviously stupid idea ever get any sort of approval? Did some dolt councillor stand up and say “I know – there’s a recession on. Let’s make things harder for the shops! Woolworths has closed, and that other one. But I won’t be happy until all the lights are out”? And did all the others turn with a sudden realisation that this was indeed what the town needed – fewer shops?

It’s a failure of community – and newspapers ought to be the things making that community realise its values and what decisions cost it. I don’t know of any websites that might have the local “news”; you can talk about microblogging and local websites, but nobody pushes a website through my door. The local freesheets – well, those are a lot easier to pick up.

Yet the local councillors are all scared of negative exposure in the papers, and will do anything to get a favourable mention (including writing bitchy letters about each others’ political doings which they cc to all the local freesheets). The trouble is that the papers don’t have enough heft in their reporting – and nothing like the bloody-mindedness – to find out what’s going on and expose it. I wonder if they’re scared that if they criticise the council too heftily they’ll either have a libel suit (indefensible; the cost would be ruinous) or of scaring away local advertisers for seeming too aggressive? Yet I’d read – hell, I’d buy – a paper that I felt had the same interests as me, of trying to stop stupid ideas going ahead without consultation.

Item: the council (not sure if it was town or county; suspect the former) wanted to remove the traffic lights at one end of town and put them in the other. This would have caused huge tailbacks and pollution at the residential end of the town. Residents weren’t consulted. Only a huge protest by them – including pictures on front page of paper – got the decision put on hold.

Item: Uttlesford, the council which runs Saffron Walden, found a million-pound black hole in its accounts a year or so ago; the bottom of that one hasn’t been reached.

Item: The black hole then grew when it turned out that some of the council money had been deposited in an Icelandic bank. Wasn’t that clever. Not much has been heard since about the money. Again, it’s just too easy for the council to clam up.

This is the sort of loss of local democracy, or more specifically oversight, that is really at risk with the death of newspapers. Should I have a Google alert set up for “Saffron Walden”? But that won’t take me to the council minutes – and anyway, it’s what’s not in the minutes that counts. The backroom deals (such as, I dunno, prettying up fountains with money provided under section 104106 of the Planning Act by, I dunno, do property developers provide money?) don’t get minuted.

Who’s going to go to the meetings where they come up with idiot plans like these and ask tough questions? Who’s going to buy their ink by the barrel and keep asking in 140-point headlines where the hell council taxpayers’ money is? Who?

Which brings us, roundaboutly, to Tom Watson (not the ministerial one), who does some Ink-Stained Retching:

Crowdsourcing journalism is all the rage, but the idea of its widespread ascendancy and competence is the exclusive province of either deranged optimists or ideological cyberlibertarians; the vast populace will never produce great journalism – or even sufficient journalism of the kind that has nurtured our republic – any more than it will perform surgery on a widespread amateur basis, or turn out competent oil paintings by the millions.

Yup. And:

A network of thousands and thousands of young reporters taking notes and asking tough questions – and then writing up their reports in public, for the public – at thousands and thousands of school board and town council meetings on gray Tuesday evenings all around the nation will begin to fade.

“So as newspapers die, it’s worth considering the effects on society. Who will tell the people what their institutions are doing? Who will ferret out the corruption? Who will fend off the legal challenges to public information? If no viable alternative emerges, what does that mean for our representative democracy?

Back to Watson:

I was talking with James Wolcott about this earlier this week and he made a great point – who’s going to churn out all those important but relatively small-scale exposes on bad government contracts and neighborhood graft, the kinds of pieces regularly published by the tabloids and small city dailies? As Bob Stein writes, apropos of reporting’s demise: “For journalism, the goal has never been cosmic verities but everyday truth.”

The everyday truth in Saffron Walden? People who run shops and market stalls are starting to get worried about whether they can cover their bills, because the council did a stupid, mindless, thoughtless thing and nobody stood up quickly and loudly enough to point out that it was a stupid, mindless, thoughtless idea that would hurt peoples’ livelihoods during a brutal recession. I’m not holding my breath for the leader of Saffron Walden’s town council to appear on Jon Stewart’s Daily Show, either.

How about you? How are things in your town? Would you be surprised if you turned up in the market square and found it being ripped up by diggers? Sure, as “Bruce” observes in the comments to Watson’s post, you know about the iPhone getting cut and paste, and you’ve got an opinion about the new Facebook UI. Now tell us how much you know what’s being done with your money a mile down the road.

And while you’re here, can I interest you in a subscription to a newspaper website? Local? Regional? National? And will you be paying by credit card or PayPal?

Myth: Charging for content consigns a newspaper’s website to insignificance, and removes it from the “conversation” of the blogs. This has been exploded by the Journal in the 18 months or so since the Rupert Murdoch takeover. In that time the smartest move made by the Journal has been to create a hybrid model where nearly all Journal stories can be reached, for free, by way of a Google News search—and are available for links by bloggers—while the Journal site itself, as an integrated package, remains behind a pay wall. The result has been that the Journal has climbed the charts to now rank ahead of all but two free newspaper sites in terms of page views, according to web-information company Alexa.

Important related reading: Emily Bell (director of digital content at the Guardian) on the “too much stuff” meme (in an article headlined “The biggest mistake of the past 10 years? Too much stuff”):

How does an industry that has force-fed all manner of output to an audience that can’t digest it draw back? The economic downturn will make this confrontation easier to resolve. The way out is for a narrowing at one end of the distribution pipe – the creation end. Production companies in the UK are now bigger and more powerful than broadcasters, not least because of the over-commissioning spree.

So the conclusion:

Rationally this is something every media business knows, but moving towards it is incredibly painful and often extremely expensive. Not to mention slow. The light at the end of the tunnel is the possibility that, when all of the current attrition is over, there will still be enough revenue from advertising to support the very best of the content. Shrinkage is the new black, even the stylish Lygo can see that. The war against too much stuff has officially begun. The challenge is to make sure we are left, when the gloom lifts, with the right stuff.

This has the makings of a very brutal meme. But the bubble has burst – wholesale money of all sorts is gone. Readjust. It’s different.

I’m not hearing “solution!” to the problem of newspapers and content and getting paid. Paywalls? Actually, they do work – at least for the FT and the Wall Street Journal. (A bit.) Advertising? Ummm..

Some of the Philip K. Dick short stories I’ve read have robot journalists – people come out of their work and are interviewed by machines. It never occurred to me to question why there were still people working in laboratories, yet newsgathering could be done by robots.

But the way we’re going, he’s going to be close enough. We come again to the long-lived micropayments issue. Writing in Time on micropayments (and note, in passing, the SEO-unfriendly URL there) under the title of “How to Save Your Newspaper” (with more of those wacky Random Capitalisations), we have Walter Isaacson:

Another group that benefits from free journalism is Internet service providers. They get to charge customers $20 to $30 a month for access to the Web’s trove of free content and services. As a result, it is not in their interest to facilitate easy ways for media creators to charge for their content. Thus we have a world in which phone companies have accustomed kids to paying up to 20 cents when they send a text message but it seems technologically and psychologically impossible to get people to pay 10 cents for a magazine, newspaper or newscast.

There’s also, for entertainment, the way that links are almost randomly stuck attached to the ends of paragraphs (one mentions iTunes; the end of the paragraph offers a link to “See Apple’s 10 best business moves”. Uh?).

He’s got a good point about ringtones vs content. That’s partly the question of utility – a ringtone you can use again and again, whereas do you have many newspaper articles that you return to again and again?

Balance against that a splendid rant by David Simon, co-author of The Wire, a former crime reporter on the Baltimore Sun, who got outraged enough (actually, he’s fairly easily outraged on certain topics, it seems) to start moonlighting as a reporter again. In Baltimore. About crime. And venting (his word) at the editor of the Baltimore Sun to get its interest up again.

Half-truths, obfuscations and apparent deceit — these are the wages of a world in which newspapers, their staffs eviscerated, no longer battle at the frontiers of public information. And in a city where officials routinely plead with citizens to trust the police, where witnesses have for years been vulnerable to retaliatory violence, we now have a once-proud department’s officers hiding behind anonymity that is not only arguably illegal under existing public information laws, but hypocritical as well.

There is a lot of talk nowadays about what will replace the dinosaur that is the daily newspaper. So-called citizen journalists and bloggers and media pundits have lined up to tell us that newspapers are dying but that the news business will endure, that this moment is less tragic than it is transformational.

Well, sorry, but I didn’t trip over any blogger trying to find out McKissick’s identity and performance history. Nor were any citizen journalists at the City Council hearing in January when police officials inflated the nature and severity of the threats against officers. And there wasn’t anyone working sources in the police department to counterbalance all of the spin or omission.

I didn’t trip over a herd of hungry Sun reporters either, but that’s the point. In an American city, a police officer with the authority to take human life can now do so in the shadows, while his higher-ups can claim that this is necessary not to avoid public accountability, but to mitigate against a nonexistent wave of threats. And the last remaining daily newspaper in town no longer has the manpower, the expertise or the institutional memory to challenge any of it.

Throw those together. Micropayments don’t work. Bloggers aren’t covering the beat. Newspapers aren’t able to afford to cover the beat any more. And advertising staff aren’t getting the revenues from ads.

All together, it’s a mess. Maybe we do need to start creating a robot that can stick its hand up and say “Sir Fred, do you intend to pay back the money?” Obviously, you’ll build a microphone right into the hand. Save some money right there. Get to it, guys.